Market Overview

TTM Technologies, Inc. Reports Third Quarter 2016 Results

Share:

COSTA MESA, Calif., Oct. 26, 2016 (GLOBE NEWSWIRE) -- TTM Technologies, Inc. (NASDAQ: TTMI), a leading global printed circuit board ("PCB") manufacturer, today reported results for the third quarter 2016, which ended September 26, 2016. 

Third Quarter 2016 Highlights

  • Net sales were $641.7 million
  • GAAP net income attributable to stockholders was $25.6 million, or $0.23 per diluted share
  • Non-GAAP net income attributable to stockholders was $40.1 million, or $0.39 per diluted share
  • Adjusted EBITDA was $102.2 million

Third Quarter 2016 Financial Results
Net sales for the third quarter of 2016 were $641.7 million, compared to $652.0 million in the third quarter of 2015 and $601.8 million in the second quarter of 2016.

GAAP operating income for the third quarter of 2016 was $50.2 million, compared to $23.6 million in the third quarter of 2015 and $34.7 million in the second quarter of 2016. 

GAAP net income attributable to stockholders for the third quarter of 2016 was $25.6 million, or $0.23 per diluted share.  This compares to a GAAP net loss attributable to stockholders of $2.2 million, or $0.02 per share, in the third quarter of 2015 and GAAP net income of $18.5 million, or $0.17 per diluted share, in the second quarter of 2016.

On a non-GAAP basis, net income attributable to stockholders for the third quarter of 2016 was $40.1 million, or $0.39 per diluted share.  This compares to non-GAAP net income of $23.8 million, or $0.24 per diluted share, for the third quarter of 2015 and $28.4 million, or $0.28 per diluted share, in the second quarter of 2016.

Adjusted EBITDA for the third quarter of 2016 was $102.2 million, or 15.9 percent of net sales, compared to adjusted EBITDA of $87.6 million, or 13.4 percent of net sales, for the third quarter of 2015 and $90.2 million, or 15 percent of net sales, for the second quarter of 2016.

"Our third quarter revenues matched our expectations while profitability was better than forecast driving earnings to the highest level in years," said Tom Edman, CEO of TTM.  "Strong operational execution drove non-GAAP earnings above the high end of our guidance.  Sequentially, a sharp acceleration in the cellular end market more than offset modest declines in the networking and communications end market, demonstrating the benefits of diversification."

Business Outlook
For the fourth quarter of 2016, TTM estimates that revenue will be in the range of $650 million to $690 million, and non-GAAP net income will be in the range of $0.42 to $0.48 per diluted share.  Our fourth quarter will have 14 weeks compared to the normal 13 weeks as fiscal 2016 is a 53 week year.

To Access the Live Webcast/Conference Call
TTM will host a conference call and webcast to discuss third quarter 2016 results and fourth quarter 2016 outlook on Wednesday, October 26, 2016, at 4:30 p.m. Eastern Time (1:30 p.m. Pacific Time).  The conference call will include forward-looking statements.

Telephone access is available by dialing domestic 800-344-6698 or international 785-830-7979 (ID 9216628).  The conference call also will be webcast on TTM's website at www.ttm.com.

To Access a Replay of the Webcast
The replay of the webcast will remain accessible for one week following the live event on TTM's website at www.ttm.com.  

About TTM
TTM Technologies, Inc. is a leading global printed circuit board manufacturer, focusing on quick-turn and technologically advanced PCBs, backplane assemblies and electro-mechanical solutions. TTM stands for time-to-market, representing how TTM's time-critical, one-stop manufacturing services enable customers to shorten the time required to develop new products and bring them to market. Additional information can be found at www.ttm.com.

Forward-Looking Statements
This release contains forward-looking statements that relate to future events or performance. TTM cautions you that such statements are simply predictions and actual events or results may differ materially. These statements reflect TTM's current expectations, and TTM does not undertake to update or revise these forward looking statements, even if experience or future changes make it clear that any projected results expressed or implied in this or other TTM statements will not be realized. Further, these statements involve risks and uncertainties, many of which are beyond TTM's control, which could cause actual results to differ materially from the forward-looking statements. These risks and uncertainties include, but are not limited to, general market and economic conditions, including interest rates, currency exchange rates and consumer spending, demand for TTM's products, market pressures on prices of TTM's products, warranty claims, changes in product mix, contemplated significant capital expenditures and related financing requirements, TTM's dependence upon a small number of customers and other factors set forth in the "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" sections of the Company's public reports filed with the SEC.

About Our Non-GAAP Financial Measures
This release includes information about TTM's adjusted EBITDA, non-GAAP net income and non-GAAP earnings per share, all of which are non-GAAP financial measures. TTM presents non-GAAP financial information to enable investors to see TTM through the eyes of management and to provide better insight into TTM's ongoing financial performance. 

A material limitation associated with the use of the above non-GAAP financial measures is that they have no standardized measurement prescribed by GAAP and may not be comparable to similar non-GAAP financial measures used by other companies.  TTM compensates for these limitations by providing full disclosure of each non-GAAP financial measure and reconciliation to the most directly comparable GAAP financial measure.  However, the non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP.

TTM TECHNOLOGIES, INC. 
Selected Unaudited Financial Information 
(In thousands, except per share data) 
             
             
   Third Quarter Second Quarter First Three Quarters 
    2016   2015   2016   2016   2015  
             
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS           
             
Net sales  $641,720  $652,005  $601,847  $1,826,825  $1,426,614  
Cost of goods sold  532,158   562,887   504,202   1,536,055   1,224,747  
             
Gross profit  109,562   89,118   97,645   290,770   201,867  
             
Operating expenses:           
Selling and marketing  15,643   17,642   16,569   49,518   39,398  
General and administrative  35,641   39,456   37,931   109,721   125,455  
Amortization of definite-lived intangibles  5,949   6,421   5,949   17,845   12,205  
Restructuring charges  2,103   2,003   3,989   8,005   2,512  
Impairment of long-lived assets  -   -   -   3,346   -  
Gain on sale of assets  -   -   (1,472)  (1,472)  (2,504) 
Total operating expenses  59,336   65,522   62,966   186,963   177,066  
             
Operating income  50,226   23,596   34,679   103,807   24,801  
             
Interest expense  (18,873)  (21,002)  (20,084)  (60,741)  (39,545) 
Loss on extinguishment of debt  -   -   -   -   (802) 
Other, net   3,930   3,998   3,191   8,330   4,264  
             
Income (loss) before income taxes  35,283   6,592   17,786   51,396   (11,282) 
Income tax (provision) benefit  (9,513)  (8,730)  979   (14,011)  (23,993) 
             
Net income (loss) $25,770  $(2,138) $18,765  $37,385  $(35,275) 
             
Net income attributable to noncontrolling interest  (188)  (99)  (217)  (519)  (128) 
Net income (loss) attributable to stockholders $25,582  $(2,237) $18,548  $36,866  $(35,403) 
             
Earnings (loss) per share attributable to stockholders:           
Basic  $0.26  $(0.02) $0.19  $0.37  $(0.39) 
Diluted  $0.23  $(0.02) $0.17  $0.36  $(0.39) 
             
Weighted-average shares used in computing per share amounts:           
Basic   100,245   99,128   100,170   100,004   90,522  
Diluted   127,645   99,128   126,950   101,094   90,522  
             
             
Reconciliation of the numerator and denominator used to calculate basic earnings per share and diluted earnings per share:       
             
Net income attributable to stockholders $25,582    $18,548      
Add back items: interest expense, net of tax  3,321     3,285      
Adjusted net income attributable to stockholders $28,903    $21,833      
Weighted-average shares outstanding  100,245     100,170      
Dilutive effect of convertible debt  25,940     25,940      
Dilutive effect of performance-based stock units, restricted stock units and stock options  1,460     840      
Diluted shares  127,645     126,950      
Earnings per share attributable to stockholders:           
Basic  $0.26    $0.19      
Diluted  $0.23    $0.17      
             
             
SELECTED BALANCE SHEET DATA            
   September 26, 2016 December 28, 2015       
Cash and cash equivalents, including restricted cash $291,783  $262,630        
Accounts and notes receivable, net  449,335   454,001        
Inventories   281,169   268,923        
Total current assets  1,055,988   1,022,520        
Property, plant and equipment, net  1,026,213   1,103,067        
Other non-current assets  525,025   514,546        
Total assets  2,607,226   2,640,133        
             
Short-term debt, including current portion of long-term debt $146,473  $157,375        
Accounts payable  370,660   347,916        
Total current liabilities  746,867   744,994        
Debt, net of discount  935,377   1,013,411        
Total long-term liabilities  1,007,244   1,068,470        
Total equity  853,115   826,669        
Total liabilities and equity  2,607,226   2,640,133        
             
SUPPLEMENTAL DATA           
   Third Quarter Second Quarter First Three Quarters 
    2016   2015   2016   2016   2015  
Gross margin  17.1%  13.7%  16.2%  15.9%  14.2% 
Operating margin  7.8%  3.6%  5.8%  5.7%  1.7% 
             
End Market Breakdown:           
   Third Quarter Second Quarter     
    2016   2015   2016      
             
Aerospace/Defense  15%  14%  16%     
Automotive  19%  17%  19%     
Cellular Phone  17%  16%  10%     
Computing/Storage/Peripherals  12%  12%  13%     
Medical/Industrial/Instrumentation  14%  14%  16%     
Networking/Communications  21%  25%  25%     
Other   2%  2%  1%     
             
Stock-based Compensation:           
   Third Quarter Second Quarter     
    2016   2015   2016      
Amount included in:           
Cost of goods sold $412  $322  $429      
Selling and marketing $268   294   271      
General and administrative  2,119   2,056   2,145      
Total stock-based compensation expense $2,799  $2,672  $2,845      
             
             
Operating Segment Data:           
   Third Quarter Second Quarter     
Net sales:  2016   2015   2016      
PCB  $598,656  $604,771  $563,574      
E-M Solutions  46,246   49,658   40,427      
Corporate    -     -      -       
Total sales  644,902   654,429   604,001      
Inter-segment sales    (3,182)    (2,424)    (2,154)     
Total net sales $  641,720  $652,005  $  601,847      
             
Operating segment income:           
PCB  $75,501  $52,191  $64,970      
E-M Solutions  1,421   (1,729)  (153)     
Corporate    (20,747)   (20,445)    (24,189)     
Total operating segment income  56,175   30,017   40,628      
Amortization of definite-lived intangibles    (5,949)    (6,421)    (5,949)     
Total operating income  50,226   23,596   34,679      
Total other expense    (14,943)    (17,004)    (16,893)     
Income before income taxes $  35,283  $  6,592  $  17,786      
             
RECONCILIATIONS1           
   Third Quarter Second Quarter First Three Quarters 
    2016   2015   2016   2016   2015  
Non-GAAP gross profit reconciliation2:           
GAAP gross profit $109,562  $89,118  $97,645  $290,770  $201,867  
Add back item:           
Inventory markup  -   8,214   -   -   15,622  
Stock-based compensation  412   322   429   1,161   790  
Non-GAAP gross profit $109,974  $97,654  $98,074  $291,931  $218,279  
Non-GAAP gross margin  17.1%  15.0%  16.3%  16.0%  15.3% 
             
Non-GAAP operating income reconciliation3:           
GAAP operating income $50,226  $23,596  $34,679  $103,807  $24,801  
Add back items:           
Amortization of definite-lived intangibles  5,949   6,421   5,949   17,845   12,205  
Stock-based compensation  2,799   2,672   2,845   7,890   7,026  
Gain on sale of assets  -   -   (1,472)  (1,472)  (2,504) 
Acquisition-related costs  197   2,065   605   1,493   32,927  
Inventory markup  -   8,214   -   -   15,622  
Impairments and restructuring charges  2,103   2,003   3,989   11,351   2,512  
Non-GAAP operating income $61,274  $44,971  $46,595  $140,914  $92,589  
Non-GAAP operating margin  9.5%  6.9%  7.7%  7.7%  6.5% 
             
Non-GAAP net income and EPS attributable to stockholders reconciliation4:           
GAAP net income (loss) attributable to stockholders $25,582  $(2,237) $18,548  $36,866  $(35,403) 
Add back items:           
Amortization of definite-lived intangibles  5,949   6,421   5,949   17,845   12,205  
Stock-based compensation  2,799   2,672   2,845   7,890   7,026  
Non-cash interest expense  4,721   4,819   5,608   16,483   10,733  
Gain on sale of assets  -   -   (1,472)  (1,472)  (2,504) 
Acquisition-related costs  197   2,065   605   1,493   32,927  
Inventory markup  -   8,214   -   -   15,622  
Impairments, restructuring and other charges  2,103   2,003   3,989   11,351   3,314  
Income taxes  (1,208)  (122)  (7,649)  (8,036)  5,622  
Non-GAAP net income attributable to stockholders $40,143  $23,835  $28,423  $82,420  $49,542  
Non-GAAP earnings per diluted share attributable to stockholders $0.39  $0.24  $0.28  $0.82  $0.54  
             
Non-GAAP diluted number of shares5:           
Diluted shares  127,645   100,035   126,950   101,094   91,455  
Dilutive effect of convertible debt  (25,940)  -   (25,940)  -   -  
Non-GAAP diluted number of shares  101,705   100,035   101,010   101,094   91,455  
             
Adjusted EBITDA reconciliation6:           
GAAP net income (loss) $25,770  $(2,138) $18,765  $37,385  $(35,275) 
Add back items:           
Income tax provision (benefit)  9,513   8,730   (979)  14,011   23,993  
Interest expense  18,873   21,002   20,084   60,741   39,545  
Amortization of definite-lived intangibles  5,949   6,421   5,949   17,845   12,205  
Depreciation expense  37,006   40,091   40,457   117,690   94,403  
Stock-based compensation  2,799   2,672   2,845   7,890   7,026  
Gain on sale of assets  -   -   (1,472)  (1,472)  (2,504) 
Acquisition-related costs  197   2,065   605   1,493   32,927  
Inventory markup  -   6,792   -   -   14,200  
Impairments, restructuring and other charges  2,103   2,003   3,989   11,351   3,314  
Adjusted EBITDA $102,210  $87,638  $90,243  $266,934  $189,834  
Adjusted EBITDA margin  15.9%  13.4%  15.0%  14.6%  13.3% 
             
Free cash flow reconciliation:           
Operating cash flow  102,737   14,735   80,057   200,686   97,632  
Add back items:           
Payment of accreted interest on convertible sr. notes  -   -   -   -   8,731  
Payment of acquisition-related costs    11     6,610     691     3,026     34,688  
Adjusted operating cash flow  102,748   21,345   80,748   203,712   141,051  
Capital expenditures, net  (24,221)  (30,413)  (18,183)  (62,520)  (76,876) 
Free cash flow $78,527  $(9,068) $62,565  $141,192  $64,175  
             
1 This information provides a reconciliation of non-GAAP gross profit, non-GAAP operating income, non-GAAP net income attributable to stockholders, non-GAAP EPS attributable to stockholders, and adjusted EBITDA to the financial information in our consolidated condensed statements of operations. 
             
2 Non-GAAP gross profit and gross margin measures exclude stock-based compensation expense, and inventory markup. 
             
3 Non-GAAP operating income and operating margin measures exclude amortization of intangibles, stock-based compensation expense, gain on sale of assets, inventory markup, acquisition-related costs, asset impairments, restructuring and other charges. 
             
4 This information provides non-GAAP net income attributable to stockholders and non-GAAP EPS attributable to stockholders, which are non-GAAP financial measures. Management believes that both measures -- which add back amortization of intangibles, stock-based compensation expense, non-cash interest expense on debt (before consideration of capitalized interest), gain on sale of assets, inventory markup, acquisition-related costs, asset impairments, restructuring and other charges as well as the associated tax impact of these charges and discrete tax items -- provide additional useful information to investors regarding the Company's ongoing financial condition and results of operations. 
             
5 Non-GAAP diluted number of shares used in computing non-GAAP earnings per share attributable to stockholders excludes the dilutive effect of convertible debt. 
             
6 Adjusted EBITDA is defined as earnings before interest expense, income taxes, depreciation, amortization of intangibles, stock-based compensation expense, gain on sale of assets, inventory markup, acquisition-related costs, asset impairments, restructuring and other charges. We present adjusted EBITDA to enhance the understanding of our operating results, and it is a key measure we use to evaluate our operations.  In addition, we provide our adjusted EBITDA because we believe that investors and securities analysts will find adjusted EBITDA to be a useful measure for evaluating our operating performance and comparing our operating performance with that of similar companies that have different capital structures and for evaluating our ability to meet our future debt service, capital expenditures, and working capital requirements.  However, adjusted EBITDA should not be considered as an alternative to cash flows from operating activities as a measure of liquidity or as an alternative to net income as a measure of operating results in accordance with accounting principles generally accepted in the United States of America. 
             
Contact: Sameer Desai, Senior Director, Corporate Development & Investor Relations sameer.desai@ttmtech.com 714-327-3050

Primary Logo

View Comments and Join the Discussion!